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Is Estate Tax Really a Burden for ND Farmers?

Senate Republicans, including John Hoeven, R-N.D., are breaking with House GOP plans to completely repeal the estate tax. (Joe Raedle/Getty Images)

November 10, 2017

BISMARCK, N.D. – The estate tax is becoming a sticking point for tax reform in Washington, but what impact does it really have on farmers? While House Republicans have called for a complete repeal of the tax, Republican senators including North Dakota's John Hoeven say they only want to partially repeal the tax.

In a September speech in North Dakota, President Donald Trump said the estate tax was a "tremendous burden" for family farmers.

Andrew Swenson, a farm management specialist and researcher with North Dakota State University, disputes this. He says going back to the most recently available tax returns in 2014, about 15 estates in North Dakota had to pay this tax and of those, only about two or three were farms.

"If you're taking a look at two or three farm estates that have to pay an estate tax each year, I'd say that's pretty minimal impact," he says. "And the concern given is that these will break up existing farms and of those two or three examples every year, how many of them would have offspring that would want to come back and continue the farm?"

Swenson says the numbers are probably similar in more recent years. The tax is graduated and levied on estates valued at more than $5.5 million, or $11 million for married couples. Still, there are some farms where assets and land value top this amount.

In 2016, the estate tax generated more than $18 billion in revenue. Swenson says in order to balance cutting those funds out, tax reformers in Congress will have to cut revenue in other areas, which could potentially mean slashing crop insurance subsidies or other programs that are good for farmers.

"It's going to impact just a handful of farm estates across the country every year, but potentially could impact the revenue to a much larger group of farmers if, in trying to offset these revenue cuts, they try to cut some spending," he warns. "And one of those areas could be in the farm bill."

According to the Department of Agriculture, less than a half percent of the country's nearly 40,000 farm estates paid any estate tax in 2016.